In this video by the New England Journal of Medicine, Cato adjunct scholar and George Mason University law professor Ilya Somin debates ObamaCare’s individual mandate with Jack Balkin, a professor of constitutional law and the First Amendment at Yale Law School. Transcript here.
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Yes, ObamaCare Will Eliminate Some 800,000 Jobs
From my article “ObamaCare–The Way of the Dodo” in Virtual Mentor, a journal of the American Medical Association:
The CBO projects the law will eliminate an estimated 800,000 jobs. The fashionable retort is to note that this effect “primarily comes from workers who choose not to work because they no longer have to work at jobs just for the health insurance.” That defense fails for two reasons. First, a “job” is when Smith and Jones exchange labor for money. It doesn’t matter whether Jones withdraws the money or Smith withdraws the labor. Either act eliminates a job. Second, it’s an odd defense of a law to say it encourages people to consume without producing.
Emphasis added; citations embedded as hyperlinks.
Put differently: why should we care only about someone not getting a paycheck and not at all about a job left undone?
Update: When he’s talking about something other than ObamaCare, President Obama himself acknowledges that suppressing the labor supply is as harmful as suppressing demand. Obama laments how government policies “cost[] us hundreds of billions of dollars in wages that will not be earned, jobs that will not be done, and purchases that will not be made.”
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ObamaCare–The Way of the Dodo
In the latest issue of Virtual Mentor, a journal of the American Medical Association, I try to capture the multiple absurdities that make up ObamaCare. An encapsulation:
During the initial debate over ObamaCare, House Speaker Nancy Pelosi (D‑CA) famously said, “We have to pass [it] so you can find out what’s in it.” One irreverent heir to Hippocrates quipped, “That’s what I tell my patients when I ask them for a stool sample.” The similarities scarcely end there…
ObamaCare supporters are ignoring the federal government’s dire fiscal situation; ignoring the law’s impact on premiums, jobs, and access to health insurance; ignoring that a strikingly similar law has sent health care costs higher in Massachusetts; ignoring public opinion, which has been solidly against the law for more than 2 years; ignoring the law’s failures (when they’re not declaring them successes); and ignoring that the law was so incompetently drafted that it cannot be implemented without shredding the separation of powers, the rule of law, and the U.S. Constitution itself. Rather than confront their own errors of judgment, they self-soothe: The public just doesn’t understand the law. The more they learn about it, the more they’ll like it…
This denial takes its most sophisticated form in the periodic surveys that purport to show how those silly voters still don’t understand the law. (In the mind of the ObamaCare zombie, no one really understands the law until they support it.) A prominent health care journalist had just filed her umpteenth story on such surveys when I asked her, “At what point do you start to question whether ObamaCare supporters are just kidding themselves?”
Her response? “Soon…”
(For more proof that ObamaCare supporters can draw from an apparently bottomless well of denial, see this article by Politico.)
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The GOP’s Legislative Malpractice
If you read Virginia Attorney General Ken Cuccinelli’s op-ed in Sunday’s Washington Post, you witnessed the too-rare spectacle of a Republican denouncing his own party’s hypocrisy on medical malpractice reform:
With Senate Bill 197 — legislation that would have the federal government dictate how state judges are to try medical malpractice cases and cap what state courts may award — several Republican senators have…take[n] an approach that implies “Washington knows best” while trampling states’ authority and the 10th Amendment. The legislation is breathtakingly broad in its assumptions about federal power, particularly the same power to regulate commerce that lies at the heart of all the lawsuits (including Virginia’s) against the individual mandate of the 2010 federal health-care law. I have little doubt that the senators who brought us S. 197 oppose the use of the commerce clause to compel individuals to buy health insurance. Yet they have no qualms about dictating to state court judges how they are to conduct trials in state lawsuits…
This legislation expands federal power, tramples the states and violates the Constitution. And if it were ever signed into law — by a Republican or Democratic president — I would file suit against it just as fast as I filed suit when the federal health-care bill was signed into law in March 2010 (15 minutes later).
For more on why ObamaCare is unconstitutional see this white paper by Cato chairman Bob Levy. For a discussion of why nearly all federal med mal reforms are unconstitutional, see this Policy Analysis by Bob Levy and Michael Krauss. For a discussion of why mandatory caps on damages may harm patients, see this recent Policy Analysis by Cato adjunct scholar Shirley Svorny. For an individual-rights-based approach to med mal reform, see this paper by yours truly.
Libertarians, Medical Malpractice and Contract
Last week, as Michael Cannon has noted in this space, Cato published Shirley Svorny’s partial defense of the medical malpractice system, and ever since, knowing my interest in the subject, people have been asking me what I think of it. There is of course no consensus view among libertarians on how to weigh the many important empirical factors, disputed and otherwise, at play here. (For example, I am more alarmed than Svorny at the large volume of claims filed against blameless doctors, and less reassured than Svorny that (p.3) “the dollar amounts [in awards and settlements arising from unfounded cases] are smaller than they would be for similar injuries that result from physician negligence.”
But the empirical disagreements can mostly await another day. To the extent libertarians have made one durable contribution to the med-mal debate, it is to uphold the role of contract — a principle advanced by Richard Epstein in his pioneering Medical Malpractice: The Case for Contract and more recently by Michael Cannon in a paper last year. In brief: most medical interactions occur after a point at which the patient, or someone authorized to make decisions on his or her behalf, could have made a contractual election on how to specify compensation if at all in case of medical misadventure. In modern health care delivery, this would mostly not have to take place at the last minute on arrival for treatment (“Could you set this broken arm? I promise not to sue you for more than a half million if something goes wrong, nor for anything short of gross negligence, and yes, I agree to arbitration.”) Instead, matters could proceed far more efficiently if negotiated wholesale beforehand through health insurers or other intermediaries: as part of your health plan, you would get a set of rights in case of dispute, pre-negotiated with doctors and other providers, which might involve damage specifications, arbitration procedures, submission of specialized fact issues to expert panels, and so on.
The one signal fact about the American court system is that, paternalistically, it generally refuses to enforce contractual arrangements of this sort. No matter how well spelled out in advance, courts will not enforce the disclaimer of liability or apply the agreed-on damage limit. You will instead get the malpractice coverage that courts and lawmakers deign to prescribe for you, not the coverage you and your medical provider might have chosen yourselves.
What sort of medical liability coverage would the market furnish were people free to contract for it? A very different sort, I believe, than the pseudo-insurance package now foisted on the parties. While a genuine private insurance market does indeed exist to furnish coverage against accidental injury, it virtually never provides unlimited payouts. Instead, it specifies a maximum — the “policy limits” — even though that means some unlucky claimants predictably will not recover their full losses. It also tends to avoid coverage triggers whose subjective or scientifically open-ended nature leaves many cases open to dispute (could obstetricians have avoided this case of cerebral palsy?) And, significantly, private insurance markets virtually never promise financial payouts for pain and suffering, as distinct from lost wages and other out-of-pocket expense. Indeed, if there is a single example from any fully private insurance market of a contractual promise to provide cash compensation for pain and suffering, I am unaware of it. Even in cases where health buyers have enormous negotiating clout — say, in dealings between the UAW/Big Three and Detroit-area health providers — I believe one has not seen contract coverage for negligence-based pain and suffering. And that points to an important empirical truth: the ex post cost of providing that kind of insurance greatly exceeds the ex ante value of the coverage to consumers, who quite rationally prefer to negotiate instead for other sorts of coverage expansion, lower copays and so on.
Like others, I grow impatient with lawmakers as they struggle with inevitably arbitrary lines on whether the pain-and-suffering component of their obligatory med-mal “insurance” should top out at $500 thousand, $1.0 million, or $1.5 million. Were they to step back and allow a market to work, I think we would soon see a distinctly un-arbitrary figure emerge: $0.00.
Praise (Sort of) for Latest Cato Health Care Study
Physician assistant and health policy wonk Michael Halasy blogs about Shirley Svorny’s new study on medical malpractice liability reform:
Cato has truly shocked me….stupefied really…
Well, just the other day, I received an update from Cato. Now, Michael Cannon is a good guy, and while he and I simply don’t agree on … well much of anything from a health policy perspective, his colleague, Shirley Svorny, wrote this: “…Reducing physician liability for negligent care by capping court awards, all else equal, will reduce the resources allocated to medical professional liability underwriting and oversight and make many patients worse off. Legislators who see mandatory liability caps as a cost-containment tool should look elsewhere.”
I believe that I have been consistent with this…over and over…caps on noneconomic damages DO NOT WORK.
So, I have to (gulp) swallow some pride, and tip my hat to Cato…Now I need to go take a shower. I feel a little dirty.
It’s a good reminder that libertarians do not fit neatly into the usual political categories. We oppose direct government regulation of health care quality, such as through clinician licensing. But we support indirect regulation, such as through the medical malpractice system, and defend that system from critics who want to impose top-down rules on that system like mandatory caps on noneconomic damages. We prefer bottom-up approaches, like letting free individuals choose their own med mal reforms.
The CLASS Act: This Is Confidence-Inspiring?
In the Daily Caller, I explain how the failure of ObamaCare’s “CLASS Act” highlights the fatal flaws in the rest of the law:
As it turns out, CLASS collapsed even before its 2012 start date. The same thing happened when Obamacare imposed the same sort of price controls on health insurance for children in September 2010: the markets for child-only coverage collapsed in a total of 17 states, and are slowly collapsing in even more…
In the face of this setback, Obamacare supporters are naturally declaring victory. Jonathan Cohn of The New Republic sees “vindication.” Kevin Drum of Mother Jones proudly announces, “What happened here is that government worked exactly the way it ought to.” The Washington Post’s Ezra Klein instructs, “The CLASS experience should, if anything, make us more confident in the underlying law.” It’s hard to argue with such logic, but let’s try…
Obamacare inspires confidence in its supporters, then, because one part of the law throws a Hail Mary pass to prevent another part of the law from stripping Americans of the insurance that currently protects them from illness and impoverishment. Feel safer?
So if you’d like secure protection from illness and impoverishment, repeal ObamaCare. Or say your prayers.